eBusiness Weekly
Business Writer
The High Court has ordered the cancellation of the transfer of a Harare property to a company called Dorex where WestPro Holdings intends to sell residential stands.
The title deed of the prime piece of land in Pomona, north of Zimbabwe’s capital – Harare – was held by Dorex, a company linked to WestProp, according to its listing prospectus.
It had been placed under judicial attachment after Fairclot Investment obtained an arbitral award against Augur Investments, another company linked to WestProp to the tune of nearly US$5 million excluding interest on March 19, 2015.
But in a notice to shareholders on Friday, WestProp said it appealed the decision at the Supreme Court.
“Following the issuance of a High Court judgement in the matters between Fairclot Investments (Private) vs Argur Investments OU and three Others HC10315/19 and Argur Investments (Pvt) Limited vs Fairclot Investments HC 598/19 consolidated under judgement number HH282-23, which affected the rights of WesProp and its subsidiaries in respect of Stand 654 Pomona Township held under Deed of Grant No 2884/10, a notice of appeal was filed today with the Supreme Court under reference SC 271-23.
“Consequently, the operations of the Court order referred to above has been suspended by operations of the law due to the filing of a notice of Appeal SC 271-23 to the Supreme Court of Appeal. Shareholders are advised that adequate contingencies have been put in place should the appeal not be successful. Nevertheless, the company is confident that there shall be no negative impact on our stakeholders, customers and shareholder value,” reads the notice.
But Fairclot Investments took Augur Investments to court claiming about US$5 million including interest and costs arising from unpaid judgment debt against the promoters of WestProp listing on the foreign currency-based Victoria Falls Stock Exchange (VEFX).
WestProp listed on the VEFX last Friday, a week after its original listing date was postponed after the Securities and Exchange Commission of Zimbabwe directed the company to publish a supplementary report on its pending court cases that had not been included in the prospectus. The Fairclot matter is one of the cases that had not been included.
Fairclot successfully argued that while the title of the deed of the property (Stand 654 Pomona) was held in escrow by a law firm on its behalf, the promoters of WestProp Holdings by way of misrepresentation obtained duplicate title deeds which they have used to transfer the property into another company called Doorex.
At the center of the dispute between Fairclot and Augur Investment was the payment of an arbitral award of US$$4,8 million. The parties were at loggerheads as to whether the Sherriff and the High Court’s decision to release from attachment Augur’s property under the pretext that the judgment debt payment was proper.
Justice Nyaradzo Munangati – Manongwa set aside the decision and declared the upliftment void.
The court directed the property be placed under judicial attachment and all transfers of title effected between the date of upliftment of judicial attachment be canceled.
The Registrar of Deeds was directed to cancel the transfer of title in five days from the day the order was granted and to advertise for the sale of the property within 10 days. The Sherriff and High Court were ordered to pay the applicant’s costs of the lawsuit.
On Wednesday, Mutumbwa Mugabe and Partners, the lawyers representing Fairclot advised Securities Exchange Commission to order WestProp to issue a cautionary statement following the judgment.
“Evidently, we had cautioned, the property (stand 654 Pomona Township) which according to the prospectus accounted for over 50 percent of WestProp’s portfolio has gone up in smoke. We believe it is not only prudent but a legal requirement that WestProp informs the public by way of a cautionary statement.
Circumstances
Fairclot Investments got an arbitral award against Augur to the tune of US$4,8 million excluding interest on March 19, 2015. Certain court processes followed with an appeal of Augur being dismissed on February 11, 2019. The award was ultimately registered as an order of the High Court on June 26 2019. A writ of execution issued on July 10 2019 resulted in the attachment of the Pomoma property.
Subsequently, Augur paid $4,8 million as the judgment debt and $1,1 million as interest.
In November 2019, the Sherriff advised Fairclot, being the judgment creditors that the debt had been paid and was proceeding to remove the property from the attachment.
Fairclot, through their lawyers protested that the property should not be removed from attachment as the judgment debt had not been extinguished given that the amount had to be paid at the prevailing interbank rate of the day and not at the rate of US$1 being equivalent to one Zimbabwe dollar. Fairclot Investments indicated to the Sheriff that its decision was contrary to the given instructions.
This led to Fairclot approaching the court seeking to protect its interests for the full payment of the debt by seeking to prevent the release of the Pomona property.
The High Court had to exercise its mind if the debt was fully paid. If it was, then the release of the property from attachment by the Sheriff of the High Court was proper.
The application by Fairclot Investments, the judgment creditor would have thus failed.
If, however, Augur Investments did not discharge the debt then the upliftment of the judicial attachment has to be declared void and the property remains under attachment.
Justice Munangati – Manongwa found that the application by Fairclot for the review of the Sheriff’s decision was proper.
“Fairclot Investments is raising issues with the manner the decision was made that it is irrational,” ruled Justice Munangati-Manongwa.
“This emanates from the decision of the Sheriff to stop execution when the amount due was not paid in full. The Sheriff was indeed aware that Augur Investments was seeking a declarator to the effect that the amount due was payable in RTGS at the rate of 1: US dollar, which application had been lodged on 19 February 2019.
“No judgment to effect such confirmation had been gotten. Equally, a letter of 23 September 2019 from Fairclot’s legal practitioners intimated that the payment made of $4,8 million was not sufficient as payment ought to be at the bank rate obtaining on the date of payment. Yet two months down the line on 21 November 2019, by way of a letter, the Sheriff declared that the judgment debt had been paid in full.
“A letter of protest dated 22 November 2019 was equally ignored by the Sherriff. Instead, the Sheriff proceeded to advise on 25 November 2019 that ‘…the Sheriff is proceeding to remove the property from judicial attachment and to uplift the caveat placed on the property.’ There is no evidence that the sheriff found himself in such a situation had sought any legal advice neither did he justify his decision. The upliftment of the caveat on the property was unreasonable and irrational given the law and the fact that the Sheriff did not address the issue of the applicable rate that had been raised by Fairclot’s legal practitioners.”
